Today’s Wall Street Journal includes a passage from a recent blog post (on Cafe Hayek) by economics professor Donald Boudreaux, who always makes sharp arguments against government meddling with the price system, and especially the minimum wage. Here’s the piece:
In a market economy a worker’s low wage reflects that worker’s low marginal productivity . . . [W]hile there are good and bad ways to raise that worker’s marginal productivity (the best way is for that worker to become more skilled), to demand a pay hike for that low-skilled worker changes only the reported symptom without addressing, much less curing, the underlying illness.
Changing analogies somewhat: just as a Toyota Yaris cannot be made as valuable to car buyers as is the more luxurious Toyota Avalon by a government diktat demanding that Yarises sell at prices no lower than the price of Avalons—just as such a diktat simply ensures that sellers of such low-end cars find no buyers—a low-skilled worker cannot be made as valuable to labor buyers as is a higher-skilled worker by a government diktat demanding that hours of low-skilled work sell at wages no lower than the wage of higher-skilled workers. Such a diktat simply ensures that sellers of such low-skilled work find no buyers.
